US$9 million payment saves Zimbabwe from IMF expulsion

By Tererai Karimakwenda
16 February 2006

The International Monetary Fund (IMF) released a statement on Wednesday announcing that Zimbabwe had made a payment of US$9 million, which fully settled its remaining overdue balance to what is known as the General Resources Account (GRA). The IMF said its Managing Director had immediately withdrawn his pending complaint, blocking procedures to cancel Zimbabwe’s membership in the powerful financial institution. But the country still owes a large amount to another IMF scheme, which amounts to US$119 million.

The government paid US120-million dollars to the IMF in September, and was granted a six-month reprieve from expulsion. An additional amount of US$15-million dollars was paid in October, followed by US10-million dollars paid in November. The source of the foreign currency used by the government to make these payments remains suspect as the economy is not generating enough to account for such large amounts. Speaking to SW Radio Africa about the latest payment, MDC shadow economic minister Tendai Biti said a number of issues arise. He said the government is neglecting its people’s needs in order to meet international obligations. Biti believes the government should address the poverty that is forcing most rural residents to eat only once a day, and provide anti-retroviral drugs for those affected by HIV/AIDs.
As for the source of the funds, Biti said this remains suspect because we import more than we export, and we have a major deficit. He believes one source is that Robert Mugabe, Reserve Bank chairman Gono and other ministers are lending the government money to pay the IMF from their own offshore secret accounts, and getting it back at high interest rates. But if the source of these payments is genuinely legitimate, then there is a parallel system of accounting which is kept from the public. Biti also said there is speculation that the government nationalised the foreign currency accounts of some Zimbabwean businesses. This, he said, would underpin the dishonesty of the Mugabe regime.

The Executive Board is scheduled to meet again to review Zimbabwe’s case in early March. According to the IMF statement, Directors will at that time “consider Zimbabwe's cooperation with the Fund on policies and payments, as well as the remaining sanctions and remedial measures relating to Zimbabwe's arrears.” Experts have said the government is not implementing economic policies suggested by the IMF, and the economy will continue to deteriorate until the current political crisis is resolved.